Saraswat Bank posts 78% growth in net profit at Rs 212.27-cr

MUMBAI: Country's biggest lender from the co-operative space, Saraswat Bank, has posted a 78 per cent growth in net profit at Rs 212.27-crore in FY 11 on the back of a lower base but said RBI's rate tightening will result in margins getting dented by up to 80 basis points this fiscal (FY 12).

"Our profitability will be hit because of the rate hikes by the Reserve Bank...as we are in co-operative sector, we have no immediate plans of passing the hike on to our borrowers," the bank's Chairman, Eknath Thakur, told reporters here today.

The bank's net interest margins stood at 3.52 per cent and Thakur expects it to come down to 2.80 per cent. Currently, bank's base rate is 10 per cent, he said.

Commenting on the performance in FY 11, Thakur said the net profit increase is high because of a lower base in the previous fiscal when the bank took a hit because of the global slowdown and its exposure to the diamond trade.

Saraswat, which has amalgamated seven banks into itself till now, is in advanced talks to takeover a Karnataka-based co-operative in a "weak" financial state. An MoU will be signed soon and the target bank has 39 branches, Thakur said, choosing not to divulge the name of the bank.

The 93-year-old bank's capital adequacy stood at 12.70 per cent and Thakur said its proposal to expand the capital by issuing shares to borrowers at book value is in advanced stages of being given the go-ahead through a change in statutes. Such a permission will help it tide over problems relating to capital raising in its growth plan.